For a business to survive and thrive it needs to be seen – that may sound overly simplistic but it’s true. Being seen is the key to attracting customers, accruing revenue and sustaining growth. To be seen, a business has to market its brand, goods, and services and it has to do it consistently – whatever the prevailing market conditions.
For the past two years, a steady flow of financial and economic analysts have predicted that the next recession is not too far away. Busts always follow booms, and the last economic restriction was in the late 2000s, after fraudulent and corrupt lending practices in the US created the aptly named Global Financial Crisis. While New Zealand was spared the greater impact of that, our economy slowed, lending was restricted and consumer confidence waned.
The interesting thing with recessions is how businesses prepare for them and what they do with promoting themselves when they occur. It’s also worth noting what some businesses do with their marketing and advertising commitments when times are good, as well.
“If you’re not seen, any money you spend [on your business] is absolutely wasted . . .”
A recent article by Damien Venuto in the NZ Herald focuses on the worst things businesses can do that result in them being invisible as a recession nears. He cites advertising company, DDB managing director, Chris Willingham’s views on what to do to ensure a business is in the best possible place to do well when a recession eases, and the economy becomes positive again.
Willingham pulls no punches when asked what is the worst thing a business can do when the economy is approaching a downturn. “Invisibility . . . If you’re not seen, any money you spend [on your business] is absolutely wasted,” he says.
The article points out then when the economy faces an uncertain future, or enters into recession, some businesses will cut their advertising and marketing budgets. When things are tight, rather than looking at ways to decrease spending in other areas, they will kill off the one thing that will keep them visible and viable.
“The evidence is overwhelming that if you continue to invest in your marketing during a downturn you will come out of that time far stronger than your competitors . . .”
“It’s a well-worn trend that’s spawned the ominous adage that marketing is the first thing to go when things get tough. The problem with this strategy, argues Willingham, is that it’s the quickest way to become invisible at a time when competitors are fighting for a contracting pool of money. ‘The evidence is overwhelming that if you continue to invest in your marketing during a downturn you will come out of that time far stronger than your competitors,’ he [says].”
This observation is backed up by research in the US by Harvard University researchers Ranjay Gulati and Nitin Nohria on how businesses reacted to global recessions in 1980, 1980 and 2000. That study found that businesses that radically cut spending had a far reduced chance of bouncing back when a recession eased.
“Companies that pared operational costs, while simultaneously continuing to invest in marketing, R&D and new assets, had a 37 percent chance of moving ahead of the pack.”
“The best strategy, according to the researchers, was to balance today’s cost cutting with investing to grow in the future. Companies that pared operational costs, while simultaneously continuing to invest in marketing, R&D and new assets, had a 37 percent chance of moving ahead of the pack.”
At NoCowboys we witnessed the same thing during the Global Financial Crisis – a large amount of businesses that began marketing their reputations online at exactly the wrong time. With consumer confidence diminished there is less spending, resulting in a lot of businesses scrambling about, without an established and trusted reputation, hoping to attract new customers.
“Cutting off visibility to save money really makes no sense at all – as it is marketing that establishes the connection between a business and consumers.”
In our experience, businesses that do well, regardless of the economy are those who keep themselves visible, year in and year out. They commit to marketing themselves where they will be seen and will always be the consumer choice over those that don’t.
Cutting off visibility to save money really makes no sense at all – as it is marketing that establishes the connection between a business and consumers. If a business is invisible it won’t receive enquiries, won’t secure quotes, cash flow will diminish and keeping above water will be a real and present danger.
Even more perplexing are the businesses that decide to boost profits when the economy is soaring by axing their marketing. They’re doing well, money is coming in, they’re busy, but they are heading for a fall.
Visibility is utterly crucial and self inflicted invisibility is a convenient short term solution that will only result in long-term harm.
To read Damien Venuto’s full article in the NZ Herald – go here.
NoCowboys is New Zealand’s online reputation marketing platform. Since 2006 we have helped thousands of Kiwi businesses to attract new customers and grow their businesses online. To find out more how they can help your business – flick us an email here.